The Key to Restaurant Innovation: Think Like a Startup

Tender Greens CEO Denyelle Bruno says true innovation goes beyond being high tech; it solves an old problem in a fresh way.

It’s hard to believe that not so long ago, the tech world was considered a dull enterprise, overpopulated by geeky programmers wearing pocket protectors and who are stuffed into windowless server rooms.

The geeks may remain, but the rest of that picture has shifted dramatically. Following the digital revolution, tech has become something of a rock-star industry where innovation and creative problem-solving are revered. Companies move quickly, constantly pushing the envelope, even if that means collecting a few failures along the way. A far cry from the drab office spaces of decades past, techie workspaces—bright, open areas with playful touches like foosball tables and even indoor slides—have become the blueprint for even non-tech companies hoping to emulate those thought leaders.

Like any other industry, foodservice can stand to learn a thing or two—or in this case, five—from startups past and present, whether they be small, emerging ventures or giants like Google and Facebook. And as with all impactful changes, it begins with a shift in mindset.

It’s not enough to fix existing systems; startups often break the system to build their own superior version from the ground up. Take Facebook as an example. As hard as it may be to believe, other social media platforms were around before Mark Zuckerberg started his own site from a college dorm. (Anyone remember Friendster or MySpace?)

“Startup/tech companies are usually defined by their desire to solve an old problem in a new way. They often start small with a proof of concept and a plan to grow once that [proof of concept] is achieved,” says Denyelle Bruno, CEO of Southern California–based Tender Greens.

Bruno speaks from experience, having worked at Apple under arguably the most iconic figure in tech, Steve Jobs. She and a handful of others were tasked with launching the company’s retail store presence at a pivotal moment in Apple’s history. The experience imprinted Bruno with a disrupter mentality that she brought with her to other brands, including Peet’s Coffee and Drybar.

The fast-casual boom of the last decade has already upended convention, with many young concepts challenging what it means to be a limited-service restaurant. Danny Meyer disrupted the burger category by elevating the quality of ingredients and applying a level of full-service hospitality to the humble operation. Brands like Blaze, MOD Pizza, and &pizza turned pizza into a build-your-own enterprise with speedy throughput and personal portion sizes.

Fast casuals also reimagined which foods could be center of plate and served in a limited-service format, with traditional sides becoming entrées—and even categories—unto themselves. Tender Greens was among the early concepts championing the salad, but the brand sought to change more about the industry than the foods it offered; it also wanted to change the way the supply chain worked.

In 2006, before opening its very first store, Tender Greens persuaded lettuce producer Scarborough Farms to invest in the fledgling restaurant. The investment wasn’t in dollars but rather in its lettuces. In exchange, Scarborough would earn equity, thus tying its fate to Tender Greens. It’s proved to be a lucrative bet for both parties, and it’s demonstrated a different way of doing business. Sourcing through a local, mid-size supplier was not only a financially savvy move, but it also ensured higher quality and a smaller environmental footprint.

“The disruption wasn’t purely based on the desire to be different; it was based on the desire to provide good, whole, real food to everyone, every day,” Bruno says. “The goal was to change people’s eating habits in a way that is better for people and the planet.”

2. Evolve—no matter your size

As a smaller concept coming into its own amid California’s tech boom, Tender Greens was in the right place at the right time to establish itself with startup proclivities. For larger legacy brands, the change may not be as organic. After all, those companies were built on standardized procedures—and it’s much easier to maneuver a sailboat than a tanker. But that doesn’t mean it’s impossible.

Domino’s is the largest pizza purveyor in the U.S., but what’s more, it is far and away the most tech-savvy of the major fast-food players. Like Microsoft and Google, Domino’s proved that breadth does not preclude larger companies from adopting a startup mindset.

“Are we a startup? Absolutely not, but we do have an environment where our team members have the ability to celebrate wins and learn from situations where things didn’t go the way we hoped,” says Christopher Thomas-Moore, vice president of digital marketing and global ecommerce for Domino’s. “This willingness to learn and get better has been the driving force behind our digital transformation.”

To that end, Domino’s fosters a culture of hyper-collaboration, as Thomas-Moore calls it, which in turn spawns initiatives with stakeholders across various departments. Some of the results are zany—like last year’s movement to pave potholes across the U.S.—but others are proving downright prescient, such as its Hotspots, wherein customers can receive a delivery at outdoor locations, like beaches or parks.

3. Embrace technology

Perhaps it should go without saying, but in order to think like a startup, a brand must not only be open to new tech and tools, but also seek out the latest and greatest advancements. Fate rewards the bold, and businesses that view technology as the ticket to innovation stand to beat competitors to the task.

One concept welcoming such upgrades with open arms is Bamboo Asia. Serving Japanese, Vietnamese, and Indian fare, the San Francisco fast casual is building a “smart” restaurant from the ground up, honing such features as a cloud kitchen before kicking up unit growth (to date it has two Bay Area locations and two on the way, including one in Clorox’s Oakland headquarters).“Tech integration is definitely the biggest topic at Bamboo Asia. We are now in a time where tech solutions for the restaurant industry are becoming more robust and can actually help restaurateurs solve some of their biggest challenges,” says CEO and cofounder Sebastiaan Van de Rijt.

The digital world can do everything from track inventory and monitor the sales of various menu items to facilitate employee scheduling and inform marketing strategy. Still, like any good startup leader, Van de Rijt sees room for improvement. That data can be invaluable, but he argues it also runs the risk of overwhelming operators because of their disparate nature. When such data are disconnected from each other, restaurateurs lack the context to understand the finer points and take action.

“Bringing all these pieces together is our tech focus for 2019, and I think that’s going to be a key moment for the industry at large: a unification of solutions, or a dashboard that manages multiple problems,” Van de Rijt says. “For restaurants that want to scale and open multiple units, it is critical that they also have their own internal platform being developed, as none of the outside tech solutions integrate with each other.”

To that end, Bamboo Asia is constructing its own custom inventory-management platform to track the 200-odd ingredients it uses daily.

The process is also augmented by the brand’s unorthodox operations: Bamboo Asia uses a commercial cooking space in Oakland (dubbed the “cloud kitchen”) to prepare its food, which is then delivered to the make lines of its various locations, thus maintaining a smaller footprint and more minimalist design. New gadgets, apps, and software may have lots of bells and whistles, but at the end of the day, the goal of tech solutions should be to simplify an existing system, which can in turn set a restaurant up for big growth.

4. Get backers

In true startup spirit, Bamboo Asia has its eye on growth. Before moving to the Bay Area, Van de Rijt owned and operated 10 Japanese fast casuals in his home country of Belgium—a feat he plans not to replicate but rather surpass with Bamboo Asia. Since it first opened in 2011, the concept has grown into a profitable business on its own, and now it’s attracting the attention of investors. Last year, it received a six-figure injection of capital from Beluga Capital, an investment firm founded by the entrepreneurs behind delivery app Caviar.

It’s no longer out of the ordinary for investors to funnel large sums of venture capital into restaurant brands. Instead, it’s become something of a litmus test for a concept’s longevity.

“The fast-casual industry in the U.S. is unparalleled. The potential of being able to replicate a proven concept in a market of 325 million people that all love to eat out and call themselves foodies is something you cannot find anywhere else in the world,” Van de Rijt says.

Indeed, foodie culture has made restaurants—particularly those still petite in size—darlings of the investment world, much in the same way tech startups are.

As one of the top players in the salad category, Tender Greens has received venture capital from none other than Danny Meyer’s Union Square Hospitality Group—in fact, it was the first outside business the group ever funded. That investment was made in concert with Alliance Consumer Growth, which forever holds bragging rights as one of the early Shake Shack backers.

Despite investor enthusiasm around hot-ticket restaurants, their leaders should take heed: The fast-casual boom has led to oversaturation, and still, new concepts continue to flood the market. Presenting key points of differentiation—and striking while the iron is hot—is paramount.

“The restaurant industry is becoming more competitive every year, and it’s important to find an innovative edge,” says Nick Halla, senior vice president of international at Impossible Foods, a plant-based food startup that is now becoming a household name. “There are many examples over the past few years, including the explosion of new models around food delivery—which has changed the fundamental economics of restaurants—and new virtual restaurant concepts created without the traditional brick-and-mortar restaurant.”

While not a restaurant but a vendor, Impossible Foods can be found in thousands of restaurants across the U.S. and continues to receive multi-million-dollar investments, with its total funding totaling a whopping $396 million.

5. Go big or go home

With capital in hand and a sound proof of concept, startups often chart a growth trajectory that more closely resembles a vertical wall than a gently ascending slope. In less than a decade, Impossible Foods’ signature burger has gone from a biochemistry lab to more than 5,000 U.S. restaurants, with plans for further market penetration both at home and abroad (the latest and largest investment round to date was made by a Singapore-based firm).

While a consumer packaged good is an entirely different beast from restaurants, the latter have, arguably, benefited more from digital advances (such as back-of-house management software and central data systems) in terms of scalability.

“With new tech solutions being built specifically for the restaurant industry, some of the challenges of scaling a fast-casual restaurant are becoming more manageable, allowing restaurants to expand faster while keeping their finger on the pulse at each location using technology,” Van de Rijt says.

Ever the champion of tech, he views the tools proffered by the original startups as instrumental in allowing restaurants to scale at the same rapid clip.

“What makes the fast-casual industry so similar to the tech industry is that the ultimate goal is to build a simple model that can be scaled quickly and efficiently to reach millions of users/diners,” he adds.

Tender Greens’ appointment of Bruno also signals a new phase in the brand’s growth. The brand stands to gain a lot by rapidly planting its flag in markets beyond its three existing states.

“Generally if something works well, it will work even better if it’s multiplied,” Bruno says. “We are primarily in California, where we know people are more conscious of the impact of their food decisions. Our [proof of concept] will be to show that people all over the country want to eat food like Tender Greens. Each market will further prove that.”